Information about Fannie Mae REO Department
Foreclosures and REO properties can have an adverse effect on the local markets in which they are located. Fannie Mae REO department’s main purpose is to promote affordable housing for Americans through disciplined management of the ageny’s repossessed portfolio of REO homes.
To ensure neighborhood stability, Fannie Mae sells most of the REO homes it manages and owns to owner occupants. Fannie Mae REO department follows a number of steps to mitigate the impact of foreclosure on a neighborhood. They are:
- Quickly securing the properties it repossess
- Properly assessing the condition of the REO home
- Making repairs and continuous maintenance to suit the locality standards
- Selling or renting to committed people, preferably, owner occupants
Functions of Fannie Mae REO Asset Management Department
The primary functions of Fannie Mae REO department are acquisition, valuation, property maintenance and disposition. During the acquisition stage, the asset management department gains the title to the foreclosed property. At this stage, the property is owned by FNMA REO. After this, it directs the local pre-approved reo agent or appraiser establish the market value of the property. The ongoing maintenance and upkeep work is done to ensure that the property is in marketable condition. The listing of the property, engaging in negotiations with potential buyers, screening documents and selling are assigned to REO listing agents by REO department at Fannie Mae.
Fannie Mae is the commonly used term for FNMA, a government sponsored enterprise chartered by Congress. Providing sufficient liquidity, stability and affordability to participating institutions in residential housing and mortgage lending markets are the primary goals vested with Fannie Mae. Fannie Mae primarily performs these functions through their participation and influence in US secondary mortgage market.
As FNMA doesn’t directly lend to customers, they employ and rely on the services of a network of mortgage entities consisting of lenders, brokers and partners to carry on their mission. Fannie Mae securitizes the loans originated by its network and issues debt in national and international debt markets. This process ensues the flow of affordable-rate funds to lenders and thereby enabes them to make further home loans due to enhanced liquidity.
Loan Servicing and Loss Mitigation
Lenders and servicers play a major role in managing the assets securitized by FNMA. A mortgage home lender is a licensed financial institution engaged in funding of residential real estate loans, while a mortgage servicer handles the collection of payments.
Borrowers who fail to make their monthly scheduled loan payments are given alternatives to cure their delinquency by the servicer. Servicers for Fannie Mae try to ensure that its investment is protected by taking appropriate and timely action to deal with delinquent loans. Before initiating foreclosure proceedings, a Fannie Mae servicer will make reasonable efforts to resolve the borrower’s default by proposing loss mitigation and relief alternatives. If a borrower, in spite of servicer’s efforts, fails to keep up with payments, a notice of default is served to them.
When a property foreclosed by servicer has a mortgage by Fannie Mae, then such repossessed home becomes part of FNMA REO inventory. Fannie Mae REO department is responsible for quickly selling off the homes its owns. The REO division manages all aspects of the REO process through a network of asset management companies, agents, brokers and vendors. A Fannie Mae Homepath REO property’s ongoing maintenance including repairs, cleaning and landscaping are handled by local vendors and contractors. Valuation, BPO, listing and selling or renting of property are handled by reo agents.
Maintenance, Listing and Selling
Fannie Mae REO listings can be seen on the HomePath website. These listings are made up of both homes Fannie Mae owns and manages for other lenders. The properties they own are usually acquired through either deed-in-lieu or foreclosure and have loan numbers begining with “88”. All questions related to FNMA manged properties must be directed to the REO department, sales representative or AMP asset manager.
When it comes to disposition of its inventory of REO homes, the REO division of Fannie Mae follows both the in-house and outsouring models. These two models vary much in the way they work.
With an “in-house” model, the reo property is assigned to a sales representative within Fannie Mae REO department. The entire disposal process from picking the right agent to the right vendor is handled by the Fannie Mae sales representative.
With an “outsourcing” model, instead of assigning to an internal sales person, the Fannie Mae reo property’s management and selling is outsourced to an external asset management company that specializes in handling REO homes. A number of agents, brokers and vendors service proprties that fall under both models of REO management.